Skilled Nursing Facility Insurance Claim Denied? How to Appeal

Skilled nursing facility (SNF) care is medically necessary when a patient requires skilled nursing assessment, wound care, physical or occupational therapy, or complex medical management that cannot safely be provided at home or in a lower level of care setting. Insurance denials for SNF care — including denials of admission, premature discharge determinations, and post-admission coverage terminations — are common and frequently overturned. Medicare, Medicaid, and commercial plans each have specific appeal protections for SNF denials.

Why Insurers Deny Skilled Nursing Facility Claims

"No longer medically necessary" or "maintenance level of care." The most common SNF denial: the insurer's utilization reviewer determines that the patient's condition has stabilized and skilled care is no longer needed — only custodial care remains. Under the landmark Jimmo v. Sebelius settlement (D. Vt. 2013), Medicare cannot deny skilled nursing care solely because a patient is not improving if skilled care is needed to maintain function or prevent further deterioration. Commercial plans are also subject to challenge on this basis.

Three-day qualifying hospitalization not met for Medicare. Medicare covers SNF care only following a qualifying hospital stay of at least three consecutive days as an inpatient (not under observation status). Patients admitted under observation status — which may look identical to inpatient admission from the patient's perspective — do not satisfy the three-day qualifying stay. If you were under observation status, appeal the hospital's classification and request an inpatient status determination.

Level of care not requiring skilled nursing. The insurer argues the patient's care needs can be met at a lower level — home health or custodial care — and that skilled nursing facility placement is not required. This determination is often based on a paper review that does not account for the patient's actual functional status, home environment, or the complexity of skilled services needed.

Prior Authorization Denied: How to Appeal" class="auto-link">Prior authorization not obtained or denied. Commercial plans require prior authorization for SNF admission. Missing or denied authorization triggers denial. Expedited authorization appeals are available when a patient's clinical situation requires urgent SNF placement.

Custodial care exclusion applied. Many commercial insurance policies exclude custodial care — assistance with activities of daily living without skilled nursing involvement. If the insurer characterizes the SNF stay as custodial rather than skilled, the claim is denied under this exclusion. The distinction between skilled and custodial care is clinically fact-specific and frequently contested.

How to Appeal a Skilled Nursing Facility Denial

Step 1: Identify the Legal Framework and Applicable Rights

For Medicare SNF denials, you have the right to request a Redetermination from the Medicare Administrative Contractor (MAC), then a Reconsideration by a Qualified Independent Contractor (QIC), then an ALJ hearing, then Appeals Council review, and finally federal court — under 42 U.S.C. § 1395ff. For commercial plans, the ACA internal and external appeal process under 45 CFR §§ 147.136 and 147.138 applies. For Medicaid, state Medicaid fair hearing rights under 42 CFR § 431.220 apply.

Step 2: Request Immediate Written Notice of Non-Coverage

When a Medicare or Medicaid SNF patient's coverage is being terminated, the facility must provide a Notice of Medicare Non-Coverage (NOMNC) at least two days before coverage ends. You have the right to request an expedited review by a Beneficiary and Family Centered Care Quality Improvement Organization (BFCC-QIO) before the termination date. The QIO must issue a decision within 72 hours, and coverage continues pending that review.

Step 3: Compile Clinical Evidence of Skilled Care Necessity

Your appeal must demonstrate that the patient requires skilled nursing or therapy that cannot be provided at a lower level of care. Gather nursing documentation of skilled services provided (wound care, medication management, IV therapy, tube feeding, monitoring of complex conditions), physical therapy and occupational therapy progress notes with functional assessments, and the skilled nursing facility's interdisciplinary care plan.

Step 4: Invoke Jimmo v. Sebelius for Maintenance-Level Denials

If the denial is based on a determination that the patient is not improving or has reached a plateau, cite the Jimmo settlement explicitly. Jimmo established that Medicare coverage cannot be denied solely because a patient's condition is not expected to improve — skilled care to maintain current function or prevent deterioration is covered. Many commercial plans apply similar standards; a Jimmo-based argument is applicable in both contexts.

Step 5: Write the Formal Appeal Citing Applicable Law

For Medicare: address the MAC's redetermination with clinical evidence. For commercial plans: file the formal internal appeal within 180 days citing ACA regulations, the plan's coverage terms, and applicable clinical evidence. Include the attending physician's letter supporting continued SNF placement, nursing facility documentation of skilled services, and any applicable clinical guidelines from the relevant specialty society.

Step 6: Escalate to External Independent Review: Complete Guide" class="auto-link">External Review or Regulatory Complaint

If the internal appeal is denied, file for independent external review under 45 CFR § 147.138 (commercial plans) or pursue the Medicare appeals process (MAC, QIC, ALJ). For Medicaid SNF denials, request a state fair hearing under 42 CFR § 431.220 within the applicable deadline.

What to Include in Your Appeal

• Denial letter identifying the specific clinical criterion or policy provision cited
• Nursing facility clinical documentation of skilled services provided with specific dates and clinical findings
• Physical and occupational therapy progress notes with functional assessments
• Attending physician's letter supporting continued skilled nursing facility placement
• Documentation of the patient's inability to safely manage at home or in a lower level of care
• Jimmo v. Sebelius settlement citation if the denial is based on lack of improvement or maintenance-level care
• For Medicare: hospital admission records confirming inpatient (not observation) status for the three-day qualifying stay

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Related Reading

• How to Write an Insurance Appeal Letter
• What Is Medical Necessity?
• Internal vs External Insurance Appeal